March 13th, 2023 — 6 min read

Do you subscribe? Automotive


I remember when I was a kid, the only subscriptions in our household were my mum’s weekly gardening magazine and the local newspaper, both delivered by our postman every Friday morning, with a pack of free seeds thrown in.

Fast forward a few decades and the landscape of subscription business models, and our relationship with them, has changed hugely. 

Today, 70% of business leaders assert that subscription business models will be a key part of their future success. And it’s no surprise, with the global subscription e-commerce market size is expected to reach $904.2 billion by 2026.

As customers, subscriptions are a much more prominent part of our lives now, with 78% of global adults now having a subscription service. Take a moment. How many subscription services do you have right now?

If you stop to think about the products and services that you subscribe to, first to mind for many will be streaming platforms, but then maybe you’ll be logging on for your at home fitness work, and perhaps you’re enjoying a cup of this month’s single origin coffee in the morning, or some unusually shaped vegetables for dinner.

These are the businesses that have grown on subscription, either by design  (Amazon Prime, Spotify, Netflix et al), or through unexpected circumstances (the boost that CV19 brought to Fender Play, Peloton and Oddbox). However, for many others, it’s a different story, as they look to pivot already successful historical business models to adapt to subscription.

And that’s where I want to focus this series – the sectors and businesses that are currently adapting their business models, and looking to build future facing subscription models.

Specifically I want to look at what this shift means for their marketing and the ways they are needing to rethink how they build their brands to connect with customers and build direct, deeper, and lasting connections not through traditional interruptive advertising, but through brand storytelling.

So buckle for our first stop on the journey, it’s automotive. A sector that’s got a long and well known tradition of car dealerships and big budget TV adverts.

Part 1 – Automotive

The dealership model in automotive goes back a long way, when in 1898 William E. Metzger obtained a franchise from General Motors to sell their steam cars. And it picked up pace from there to the point where the car dealership model has become dominant and the image of the car salesman at the local dealership, culturally entrenched.

From a business point of view, the dealership model has some real benefits to car makers. With dealers paying for cars upfront, before they’re sold to the public, it ensures strong cashflow for manufacturers. It also makes distribution much easier, as car manufacturers can reach all corners of their key markets with low cost and relative ease by leveraging existing infrastructure and local knowledge.

But a shift is afoot, as direct-to-consumer and subscription business models become more prominent. And we are seeing this in automotive too, with the traditional dealership model increasingly under threat.

Following the path paved by Tesla in selling its cars directly to customers online, almost all major car brands are exploring how they can build direct relationships with their customers (BMW, Hyundai, Ford, Peugeot, Volvo, Jaguar Land Rover, Citroen, Daimler and Mercedes Benz), in what represents a big shift away from the dominant dealership model, where customers had almost no direct connection with the company that makes their car.

Alongside the opportunity to start to build direct customer relationships, there’s something else that car companies are looking to leverage through subscription specifically – access to a new and younger group of customers they have traditionally not been reaching through the dealership model.

Reaching new, younger audiences

Whilst car leasing is not new, the direct subscription models that are now coming on the market do feel different. 

Take Volvo’s Care By Volvo and Volvo On Demand subscription services, or Hyundai’s Evolve+ as examples. Purchased directly through their owned channels, first and foremost there’s a feeling that you are buying into the brand, and benefiting from a consistent and premium experience at every step of that journey.

Then there are the products themselves, which have been designed with a greater degree of simplicity and flexibility for the customer than you would get in leasing from a car dealership – single all-inclusive monthly costs, flexible cancellation terms, and in Volvo’s case, even the ability to rent a car by the hour.

All of this makes direct subscription packages feel more in keeping with the modern subscription services that younger demographics have grown up with, where the focus is on access, not ownership. It simultaneously removes a huge barrier to entry for many younger people in buying a car – the upfront cost. 

Second to a home, cars are one of the most expensive single purchases that many people make, and that has meant that customers have skewed notably older, with the average age of a new car buyer in the UK being 54.

Car manufacturers are certainly gearing up for this opportunity to engage younger demographics our their business models evolve. Jim Rowan, Global CEO of Volvo, points out that, “Gen Z is a demographic we’ve never really spoken to before, and that’s going to be a massive change, not just for us in Volvo, but a big change for the industry.

It’s a view that’s reinforced by research from Volkswagen Financial Services UK, which showed as much as 61% of people aged 18-34 are interested in accessing a car via subscription – data that’s driving change within the business towards subscription models.

With the race to build subscription offers that can help win over younger customers, what does that mean for how these businesses must think about their marketing?

A new look for car marketing

Cars are big ticket items that have been marketed over the years in a way that reflects and supports this high price tag – the stately ad formats of TV and print. Whether they’re talking about a car’s performance, speaking to status, or alluding to notions of freedom and individuality, car marketing is generally tackled with big budget, highly glossy and very traditional advertising.

Whilst this approach to marketing may have worked historically, and may still work with their traditional 50+ customers, if car brands want to successfully engage a younger audience through subscription, they need to shift their marketing approach accordingly. 

They must recalibrate their marketing and recognise that connecting successfully with younger audiences, will require a move away from glossy TV ads to more authentic brand storytelling and a content-led approach that generates greater influence.

Why do they need to make this change?  The first reason is the choice of media. If you’re trying to reach 18-24-year-olds through the same media channels that you’ve traditionally targeted your core 45+ audience, you’re going to have a really tough time. Compared to 45+, they’re spending around a quarter of the time watching linear TV, and around half of Gen Z are not spending any time watching ad-supported TV at all (source: Whaler, “Reaching the Unreachables”, 2022).

But it’s more than the reality of a totally different media landscape that means a change is essential. With research showing that two-thirds of Gen Z find polished ads disruptive and annoying (source: Whaler, “Reaching the Unreachables”), you realise the very essence of big budget glossy car advertising is something that deeply irks this audience. If it’s out with shiny and perfect and in with authentic and real, taking your ATL creative approach into new channels is not going to cut it, you need a different approach.

Some might think that the solution here is to go the other way, and all in on influencer marketing, investing in content creators that will do the job for you and get your brand in front of their audiences in a more natural way.

Whilst the influencer promise of reach and authentic engagement is a tempting one, and perhaps is part of the solution, it presents some real challenges when trying to hold onto the consistency of brand message – you’re putting your brand into the hands of third party creators with their own tone of voice, creative approach and style. And if you’re doing this with multiple influencers at scale, it can get very messy and hard to control.

If all major car companies bring out subscription models to the market on a similar timeframe, properly leveraging the differentiating factor of a brand will be a huge advantage in picking up market share.

For car brands that are looking to engage with younger audiences as potential customers for the first time, successfully translating established brands from ATL into new marketing channels, and executing with consistency, is going to be critical.

The balance is in recognising the need to diversify marketing so it’s more in step with the expectations of new audiences you are trying to build relationships with, but do so in a way that allows you to create a first impression that’s consistent with your overall brand ethos, values and message.

The solution for this, I believe, is in brand storytelling. A new marketing medium where the brand is front and centre, but delivered through storytelling formats that are much more in step with the media that audiences want to spend time with, and can be used across the marketing lifecycle – from grabbing attention through to creating loyalty with customers over time.

We’ve seen the likes of P&G, Corona and Unilever develop their marketing strategies to integrate brand storytelling in a way that drives marketing metrics whilst creating real engagement and interest with younger audiences through original series, documentaries and entire content platforms. 

By taking just a small portion of marketing budget and investing it in strategically underpinned brand storytelling, car brands can generate ROI and create positive movement on business objectives, by opening up untapped opportunities to communicate their brand in a way that drives consideration, credibility and market share with younger audiences.